WEBVTT - China ‘Banks’ Time for Its Elderly While U.S. Seniors Drown in Debt 0:00:05.840 --> 0:00:08.680 Hello, and welcome to Stephanomics, the podcast that brings the 0:00:08.680 --> 0:00:11.920 global economy to you. We have two takes on aging 0:00:12.080 --> 0:00:16.160 this week from opposite sides of the world. First, from Shanghai, 0:00:16.480 --> 0:00:19.040 we hear how the Chinese Communist Party is turning to 0:00:19.120 --> 0:00:22.400 an old idea time banking, to help them deal with 0:00:22.440 --> 0:00:26.440 the looming challenge of a fast aging population. Then from 0:00:26.480 --> 0:00:29.440 the US, a piece on student debt, which could surprise 0:00:29.480 --> 0:00:32.640 you sky. Higher university fees and the heavy burden of 0:00:32.680 --> 0:00:35.560 student debt have been big issues on the campaign trail 0:00:35.680 --> 0:00:38.159 in recent U S elections. But if I asked you 0:00:38.200 --> 0:00:40.879 to conjure up a mental image of the people saddled 0:00:40.920 --> 0:00:43.760 with all this debt, it probably wouldn't be a seventy 0:00:43.840 --> 0:00:48.160 or eighty something retiree living in Florida. It turns out 0:00:48.320 --> 0:00:51.680 the burden of student debt is growing fastest among the 0:00:51.720 --> 0:00:54.800 over sixties. In a few minutes, we'll hear from some 0:00:54.880 --> 0:00:57.720 of the people struggling with this and learn how government 0:00:57.760 --> 0:01:01.720 programs seem to be making it worse. We'll also here 0:01:01.720 --> 0:01:05.280 why menu prices are quietly soaring but many of your 0:01:05.319 --> 0:01:09.160 favorite restaurants. But first let's head to Shanghai for that 0:01:09.240 --> 0:01:26.319 report from Bloomberg Economy reporter Charlie Juma. What you heard 0:01:26.480 --> 0:01:30.480 is parking music for some elderly folks in Shanghai. It's 0:01:30.520 --> 0:01:33.720 five pm on a Monday. About a dozen elderly men 0:01:33.840 --> 0:01:36.880 and women were already gathering at the leafy downtown street 0:01:36.920 --> 0:01:39.720 side park in Shanghai to get ready for one of 0:01:39.760 --> 0:01:46.200 their routines, dancing in the squares or guangchang wu in Chinese. 0:01:48.040 --> 0:01:51.160 It's a familiar side in cities across this vast nation, 0:01:51.560 --> 0:01:55.640 which is rapidly aging. The latest census data show the 0:01:55.680 --> 0:01:59.320 country has two sixty million residents aged sixty and above, 0:01:59.840 --> 0:02:03.559 more than eight percent of its population. By twenty fifty, 0:02:03.960 --> 0:02:08.760 it will be one in three. To diffuse this demographic 0:02:08.800 --> 0:02:11.880 time bomb, the Chinese Communist Party is turning into a 0:02:11.919 --> 0:02:16.280 foreign invention. Time banking, the brain child of Japanese lady 0:02:16.280 --> 0:02:20.720 Taruku Missushima in the nineties seventies. Time banking involves people 0:02:20.800 --> 0:02:24.640 providing social services to others in exchange for time credit 0:02:25.000 --> 0:02:28.200 that the participant can use to access similar services later 0:02:28.200 --> 0:02:36.440 in life. On a recent Wednesday morning, I went to 0:02:36.480 --> 0:02:39.160 see a time bank for myself at an elderly care 0:02:39.200 --> 0:02:49.040 home in Shanghai's Changning district. A handful of Time Bank volunteers, 0:02:49.480 --> 0:02:53.520 mostly retirees in the sixties or seventies, are busy working, 0:02:54.040 --> 0:02:56.720 each wearing badges bearing the logos of the Time Bank 0:02:56.800 --> 0:03:00.280 the workforce. One was teaching an elderly neighbor how to 0:03:00.400 --> 0:03:03.240 use a stationary bike in a small gym another word 0:03:03.320 --> 0:03:09.079 advertising bathroom and kitchen accessories designed for seniors. For the work, 0:03:09.320 --> 0:03:12.160 the volunteers will get paid not in money, but in time. 0:03:12.600 --> 0:03:15.720 They can use their accrue hours to access services from 0:03:15.720 --> 0:03:19.400 other members of the bank. One I met was Fundundi. 0:03:19.840 --> 0:03:23.200 The seventy six year old former travel services manager, is 0:03:23.240 --> 0:03:26.880 one of many so called empty nest seniors. Her husband 0:03:26.880 --> 0:03:29.880 passed away several years ago, and her only child is 0:03:29.919 --> 0:03:32.880 married and lives in another part of the city. She 0:03:33.000 --> 0:03:35.640 started working for the Channing Time Bank as a part 0:03:35.640 --> 0:03:38.680 time receptionist at the senior care house two years ago. 0:03:39.280 --> 0:03:43.760 More recently, she ventured into something slightly more challenging, teaching 0:03:43.760 --> 0:03:46.960 her fellow seniors how to download pictures on Wi Chat, 0:03:47.400 --> 0:03:50.800 the Chinese super app used for everything from instant messaging 0:03:50.880 --> 0:04:01.160 to payment. Asked why she came here to do this, 0:04:01.720 --> 0:04:04.600 she said she wanted to save time dollars for her future. 0:04:04.960 --> 0:04:08.000 What's probably more important, she said, the job is the 0:04:08.040 --> 0:04:12.640 past time for her either. It feels kind of lonely 0:04:12.720 --> 0:04:15.680 at home. It's staying by myself for too long. I'm 0:04:15.680 --> 0:04:18.800 afraid i will get in mania. I'm not really happy 0:04:18.880 --> 0:04:23.640 to hand around with other seniors. Fun has accumulated eight 0:04:23.680 --> 0:04:26.280 time dollars so far, a sum that would have been 0:04:26.360 --> 0:04:29.240 much higher if not for the pandemic last year. She 0:04:29.360 --> 0:04:31.600 told me she has no plan to spend it now, 0:04:32.000 --> 0:04:35.480 and she's keen to save more for future. China launch 0:04:35.520 --> 0:04:38.360 a pilot time banking program in some cities a few 0:04:38.440 --> 0:04:41.240 years ago. The trial has since spread to about a 0:04:41.240 --> 0:04:45.279 dozen metropolisis from Beijing to Guangzhou and the financial hub 0:04:45.320 --> 0:04:49.120 of Shanghai. Shanghai is planning to extend the trial to 0:04:49.200 --> 0:04:52.480 the entire city from just a few districts. The reason 0:04:52.520 --> 0:04:58.160 to broadened experiment is straightforward, a rapidly aging population, rising 0:04:58.200 --> 0:05:04.000 cost of senior care, and shortage of care facilities. Nin Teger, 0:05:04.400 --> 0:05:08.560 head of China's National Bureau of Statistics, expressed concerns about 0:05:08.640 --> 0:05:12.320 China's demographic train last month when he announced China's latest 0:05:12.320 --> 0:05:17.520 census result at the press briefing don't go and do. 0:05:17.680 --> 0:05:23.320 The aging of the population is further deepening. China is 0:05:23.360 --> 0:05:28.760 facing the pressure of long term sustainable development of its population. 0:05:29.880 --> 0:05:33.279 The data showed the number of Chinese people aged sixty 0:05:33.279 --> 0:05:37.039 and above has reason by forty since two thousand and ten, 0:05:37.600 --> 0:05:41.040 while China's births have fallen to their lowest in almost 0:05:41.120 --> 0:05:45.000 six decades, putting the country's population on course to peak 0:05:45.279 --> 0:05:51.000 within the next five years. The demographic clifvage, of course, 0:05:51.320 --> 0:05:55.000 is a problem of government's ownmaking. After decades of imposing 0:05:55.040 --> 0:05:58.640 a heavy handed one China policy, China has announced its 0:05:58.680 --> 0:06:02.159 planning to raise the retire manage allow all couples to 0:06:02.200 --> 0:06:05.760 have not two, but three children. But most urgent is 0:06:05.760 --> 0:06:11.560 strengthening the care for elderly citizens to be sure. Challenges 0:06:11.560 --> 0:06:14.280 facing time banking and China bound from a lack of 0:06:14.279 --> 0:06:17.479 public understanding of the concept to maintaining the quality of 0:06:17.520 --> 0:06:22.599 services and securely storing time dollars. Yet some industry experts 0:06:22.640 --> 0:06:26.880 are optimistic, citing the government's commitment and the widespread use 0:06:26.880 --> 0:06:31.040 of mobile phones. Among the optimists, it's Siging who runs 0:06:31.040 --> 0:06:37.000 the time back in the central Chinese city of Wuhan 0:06:37.920 --> 0:06:44.240 in the comers in China has its own characteristics. It 0:06:44.360 --> 0:06:47.640 usually has grand plans for a lot of things with 0:06:47.760 --> 0:06:53.120 top down designs. Under such a leadership, I believe different 0:06:53.120 --> 0:06:59.560 places will come up with different ways to promote time banking. 0:07:00.360 --> 0:07:03.479 The reason for Shanghai to push forward time banking is compelling. 0:07:04.000 --> 0:07:06.839 The city has almost six million residents who are sixt 0:07:07.000 --> 0:07:10.440 and above, or nearly a quarter of its total population, 0:07:10.920 --> 0:07:13.880 far above China's national average and about the same as 0:07:13.920 --> 0:07:18.840 some developed countries. Set Up in two thousand nine, the 0:07:18.920 --> 0:07:22.280 Chinese Time Bank has signed up more than two thousand members. 0:07:22.320 --> 0:07:25.600 They have deposited over two thousand furs into the bank, 0:07:26.040 --> 0:07:29.600 translating into some fifty five R and B or eighty 0:07:30.200 --> 0:07:32.720 dollars in the value of senior care services based on 0:07:32.760 --> 0:07:36.880 Shanghai's minimum wage. Only a fraction of the time deposits 0:07:36.920 --> 0:07:40.360 has been used, as most members are fifty to seventy 0:07:40.360 --> 0:07:44.200 euro retirees who have pension income but worry about rising 0:07:44.240 --> 0:07:51.240 costs of senior care. In a recent interview, Good Zoo, 0:07:51.880 --> 0:07:55.520 an official of the Shanghai Municipal Civil Affairs Bureau, told 0:07:55.560 --> 0:07:58.480 us that unlike overseas time banks whose members are from 0:07:58.560 --> 0:08:01.800 various age groups. Shanghai is mainly pushing for the model 0:08:01.840 --> 0:08:04.640 of so called young old serving the elder in light 0:08:04.720 --> 0:08:08.200 of the city's demographic structure. Due to the age of 0:08:08.280 --> 0:08:11.400 its members, the scope of the services the Chinese time 0:08:11.400 --> 0:08:14.880 bank provide is limited to helping with essentials such as 0:08:14.960 --> 0:08:20.720 paying utility bills and doing the grocery shopping. Time banking 0:08:20.880 --> 0:08:24.800 is a concept from abroad. During the process of localization. 0:08:25.200 --> 0:08:27.840 We have to twicket according to the needs of elderly 0:08:27.920 --> 0:08:31.760 care for a big city like Shanghai. Wild time banking 0:08:31.840 --> 0:08:34.280 never really took off with a strong arm of the 0:08:34.360 --> 0:08:37.640 Chinese Communist Party behind it. China just maybe the country 0:08:37.679 --> 0:08:41.400 where it does this is Charlie Drew for Bloomberg News 0:08:41.400 --> 0:08:58.480 in Shanghai. M h, well, you heard there about the 0:08:58.559 --> 0:09:01.679 Chinese government encouraging able to say for their retirement with 0:09:01.720 --> 0:09:05.000 their time as well as their money. But in the US, 0:09:05.200 --> 0:09:08.600 older Americans are being actively encouraged to run up debts 0:09:08.720 --> 0:09:12.240 which could make their old age considerably worse. In the 0:09:12.280 --> 0:09:16.480 last three years, student debt student debt among Americans over 0:09:16.520 --> 0:09:21.199 sixty two rose by nearly eight In a minute, I'll 0:09:21.240 --> 0:09:24.720 talk to Bloomberg Senior editor Alex Tanzi about what's driving 0:09:24.760 --> 0:09:27.080 this problem. But first I wanted to play you this 0:09:27.160 --> 0:09:32.040 introduction by Bloomberg Quicktake producer Madison Paglia. I should say 0:09:32.280 --> 0:09:35.640 she's a video producer. Quick take producers videos. And if 0:09:35.640 --> 0:09:37.760 you want to put faces to the voices you're about 0:09:37.800 --> 0:09:40.600 to hear, you can go online and search for older 0:09:40.640 --> 0:09:45.640 Americans frontline student debt crisis, or just embrace the magic 0:09:45.679 --> 0:09:51.079 of radio and produce the pictures for yourself. What turned 0:09:51.080 --> 0:09:54.000 out to be about thirty tho dollars student loan is 0:09:54.040 --> 0:09:59.640 now seventy never I'll die before I'll never be able 0:09:59.679 --> 0:10:01.680 to pay that off. It's kind of like a death 0:10:01.679 --> 0:10:03.840 sentence from me. I'm in a life sentence, I should 0:10:03.880 --> 0:10:08.920 say to pay those student debts. Student loan debt in 0:10:08.920 --> 0:10:12.440 the US is now at one point seven trillion, and 0:10:12.480 --> 0:10:16.040 it's growing fastest among older Americans. There are now about 0:10:16.120 --> 0:10:18.960 eight point seven million Americans over the age of fifty 0:10:19.320 --> 0:10:22.080 who are still paying off college loans and who have 0:10:22.200 --> 0:10:26.319 seen their debts increase by about half since And this 0:10:26.360 --> 0:10:28.720 is my son. He graduated in two thousand and eight 0:10:28.840 --> 0:10:32.760 from Bridgewater College with a degree in biology. I didn't 0:10:32.760 --> 0:10:35.079 want him to be stuck with having the debt that 0:10:35.160 --> 0:10:37.160 a lot of kids have when they get out of college. 0:10:37.640 --> 0:10:40.800 So I assumed that loan seventy seven year old Frank 0:10:40.880 --> 0:10:44.560 Sizer Jr. Is a retired prison warden living in Atlanta, Georgia. 0:10:44.679 --> 0:10:46.640 By the time he is ninety six years old, he 0:10:46.679 --> 0:10:50.079 will finally be finished paying off his student loans. The 0:10:50.120 --> 0:10:53.000 parent plus loan that I took out was through the 0:10:53.040 --> 0:10:58.000 Department of Education, and of course they then transferred everything 0:10:58.000 --> 0:11:01.080 over the navyant. But I think I started in two 0:11:01.120 --> 0:11:07.400 thousand and four. I'm still paying it and according to Navy, 0:11:07.440 --> 0:11:13.960 and I'll be done in two thousand and forty. My 0:11:14.160 --> 0:11:17.920 former job was ahead of the Atlanta City Jail, and 0:11:18.000 --> 0:11:22.480 before that, I was the warden of three different federal prisons, 0:11:22.600 --> 0:11:25.520 and of course I ran the prison system in Maryland. 0:11:25.800 --> 0:11:28.479 My main source of income, of course, is my retirement 0:11:28.640 --> 0:11:32.240 income and of course social Security. I sort of assumed that, 0:11:32.600 --> 0:11:34.840 like most loans, you pay it off in a reasonable 0:11:34.840 --> 0:11:37.160 amount of time, and I expected that I would have 0:11:37.240 --> 0:11:41.240 it paid off before I retired. But for a period 0:11:41.240 --> 0:11:43.160 of time while he was in school, I was just 0:11:43.200 --> 0:11:46.240 paying interest rate on the loan. Right now, a balance 0:11:46.280 --> 0:11:50.240 of about fifty two dollars. God knows what the original 0:11:50.240 --> 0:11:55.880 amount was interest rate compounding, and it just continued to grow. 0:11:56.600 --> 0:11:58.680 It came as quite a shock to me to find 0:11:58.679 --> 0:12:03.120 out that I'm going to be label with this, probably 0:12:03.960 --> 0:12:05.880 for the rest of my life. As you get older 0:12:05.880 --> 0:12:08.199 and you don't have the income that you did when 0:12:08.280 --> 0:12:11.959 you were working, it has a big effect to take 0:12:11.960 --> 0:12:16.160 about five dred a month from y'all retirement income to 0:12:16.240 --> 0:12:19.080 pay a student loan. These are the type of buses 0:12:19.160 --> 0:12:22.480 that we drove. Alma Pett used to be a school 0:12:22.480 --> 0:12:25.880 bus driver in Stockton, California, but back to back traffic 0:12:25.920 --> 0:12:30.000 accidents led to debilitating medical issues and ultimately put her 0:12:30.000 --> 0:12:34.200 out of a job. My main objective after that was 0:12:34.280 --> 0:12:36.480 to go back to school. I was in the middle 0:12:36.480 --> 0:12:40.280 of a divorce and was a single parent. I took 0:12:40.280 --> 0:12:45.000 out student loans too, not only to cover my books 0:12:45.080 --> 0:12:49.520 and the classes, but to help assist in my daily bills. 0:12:49.760 --> 0:12:52.040 Almost medical issues have caused her to be in and 0:12:52.040 --> 0:12:54.400 out of work over the years, and she is currently 0:12:54.400 --> 0:12:58.240 collecting state disability. At this age, I can't be the 0:12:58.320 --> 0:13:01.480 same worker that I was before that. I just don't 0:13:01.520 --> 0:13:03.720 see a way out. I've been trying to pay it. 0:13:04.000 --> 0:13:07.480 I've had medical problems, lots of jobs, debts in the 0:13:07.559 --> 0:13:10.640 family where I had to stop work, my husband got 0:13:10.720 --> 0:13:13.880 laid off, and in between times I couldn't pay the payments, 0:13:13.880 --> 0:13:17.400 so I had to ask for forbearance. The interests accrued. 0:13:17.640 --> 0:13:20.600 Like big time borrowers who defer all loans can face 0:13:20.640 --> 0:13:24.160 severe consequences such as capitalized interest, which can cause the 0:13:24.200 --> 0:13:27.960 original loan balance to skyrocket. Alma didn't complete her b A, 0:13:28.280 --> 0:13:32.200 but took enough units to earn a certificate. Today, Almah's 0:13:32.240 --> 0:13:35.360 debt has more than doubled. She and her husband have 0:13:35.440 --> 0:13:44.480 filed for bankruptcy. It's quite um disheartening, troubling, UH to 0:13:44.600 --> 0:13:49.000 be in the situation like this. I just don't understand 0:13:49.240 --> 0:13:54.240 why the government allows this to happen. For a thirty 0:13:54.280 --> 0:13:58.320 tho dollar loan to become a seventy tho dollar loan. 0:13:58.480 --> 0:14:01.840 I don't come from family with a lot of money, 0:14:01.920 --> 0:14:05.120 and I wanted a further my life in to provide 0:14:05.120 --> 0:14:08.760 from my family a better future. So I felt like 0:14:09.160 --> 0:14:11.160 the need to have to do it. At the time, 0:14:12.120 --> 0:14:14.440 I didn't. I didn't realize it was gonna get to 0:14:14.520 --> 0:14:18.360 this monster that it's at now. Both Frank and Alma 0:14:18.600 --> 0:14:21.320 are among the more than forty million federal student loan 0:14:21.360 --> 0:14:24.560 holders were scheduled to begin making monthly payments again on 0:14:24.600 --> 0:14:29.640 October one, once COVID nineteen debt relief measures expire. Right now, 0:14:29.680 --> 0:14:33.880 obviously with COVID nineteen, it's not accruing anything, and I 0:14:33.920 --> 0:14:36.280 don't have to pay right now, but it's soon going 0:14:36.360 --> 0:14:38.960 to start again, and with me not working, I don't 0:14:38.960 --> 0:14:43.400 know how that's gonna be feasible. And unfortunately this is 0:14:43.440 --> 0:14:46.320 not covered by bankruptcy. I would like to thank that 0:14:46.440 --> 0:14:52.160 loan forgiveness what happened. I'm very pessimistic that that will happen. 0:14:52.400 --> 0:14:54.160 You know, if you can't do a way of student loans, 0:14:54.320 --> 0:14:56.640 do away with the entrance on those student loans, because 0:14:56.680 --> 0:15:01.080 that's what really runs that cost uff and burden people. 0:15:02.360 --> 0:15:05.920 My hopes for this issue for myself is for me 0:15:06.040 --> 0:15:09.800 to be debt free from it completely. I know President 0:15:09.840 --> 0:15:14.120 Biden talked about releasing us from all debt, so if 0:15:14.160 --> 0:15:18.200 he's not gonna give us the blessing of canceling this 0:15:18.360 --> 0:15:22.320 student loan debt, I would hope and pray that at 0:15:22.400 --> 0:15:24.960 least he changes the laws so that it could be 0:15:25.000 --> 0:15:30.120 included into a bankruptcy. If education is important as everyone 0:15:30.760 --> 0:15:32.680 make it out to be, in which I agree with, 0:15:33.160 --> 0:15:37.120 that should be a better way. The wealthy not our issue. Well, 0:15:37.160 --> 0:15:41.440 I think the average person don't have that luxury. Quite honestly, 0:15:41.440 --> 0:15:44.360 I'd like for my son to go on and get 0:15:44.400 --> 0:15:47.640 his master's, but on that's going to have to be 0:15:47.720 --> 0:15:56.120 on his dime. I'm joined now by one of the 0:15:56.120 --> 0:15:59.240 people who helped uncover this story for bloom Bag, senior 0:15:59.320 --> 0:16:01.720 editor for the Real Economy team and one of our 0:16:01.760 --> 0:16:06.080 best data journalists, Alex Tanzi. Alex, thanks for being on 0:16:06.120 --> 0:16:09.360 Stephanomics U. I should start by asking you how you 0:16:09.400 --> 0:16:12.000 came across this story. It wasn't something that I had 0:16:12.440 --> 0:16:15.800 heard about, this idea of of really much older people 0:16:16.160 --> 0:16:20.000 laden with student debt. So for a number of years now, 0:16:20.400 --> 0:16:24.040 student that's becoming a more prominent problem in the US. 0:16:24.920 --> 0:16:28.520 It's up to one point seven trillion, so we've really 0:16:28.560 --> 0:16:32.560 in about that several times. And in the past years 0:16:32.600 --> 0:16:36.200 before there was forbearents for the pandemic delinquencies on student 0:16:36.320 --> 0:16:39.640 that was the highest of any consumer debt. So a 0:16:39.680 --> 0:16:41.480 lot of people are going into a lot of debt. 0:16:41.880 --> 0:16:44.800 The government wasn't getting any of this money back. So 0:16:44.840 --> 0:16:46.960 it's been an issue we've been kind of focused on, 0:16:47.160 --> 0:16:51.280 and lately we've taken a deeper look at how different 0:16:51.320 --> 0:16:55.960 parts of the population have different types of debt and 0:16:56.200 --> 0:16:59.800 the loan program for parents wanting to help their kids 0:17:00.120 --> 0:17:04.560 with the student debt um that seems to be causing 0:17:05.000 --> 0:17:07.679 particular issues. So what are the problems there? Why are 0:17:07.680 --> 0:17:11.000 people running into difficulties. One of the issue there is 0:17:11.200 --> 0:17:15.000 that type of debt. That portion of student loans is 0:17:15.119 --> 0:17:18.920 rising much more rapidly than any other portion. So a 0:17:19.000 --> 0:17:21.440 lot of parents are trying to do the best thing 0:17:21.480 --> 0:17:24.800 for their kid and incurring a lot of debt to 0:17:24.880 --> 0:17:27.679 send them to college. And the debt is not cheap. 0:17:28.000 --> 0:17:30.080 It comes with a four percent more than a four 0:17:30.119 --> 0:17:33.560 percent origination fee, So right off the top, you're paying 0:17:33.720 --> 0:17:36.920 four percent more than everyone else. And the interest rates 0:17:36.960 --> 0:17:42.240 are over seven that's extraordinary. There's a huge gap between 0:17:42.440 --> 0:17:45.600 the student loan interest rate and say the tenure. The 0:17:45.680 --> 0:17:49.639 US tenure it wu the last dozen years, it's average 0:17:49.680 --> 0:17:53.560 more than four d basis points. Well, that's four percentage 0:17:53.560 --> 0:17:57.359 points more expensive. And what is I mean? I think 0:17:57.400 --> 0:18:01.320 we obviously have seen in as Over the last few 0:18:01.400 --> 0:18:03.760 years in the US, it's been a very prominent feature 0:18:03.800 --> 0:18:05.960 student debt, not so much the parent debt, but the 0:18:06.119 --> 0:18:09.840 certainly student debt. And there's lots of proposals for helping 0:18:09.920 --> 0:18:13.200 people with it, but what's the politics of of helping 0:18:13.200 --> 0:18:16.040 older people with this kind of debt. So in the 0:18:16.119 --> 0:18:19.600 last election, for the first time it became a campaign issue. 0:18:20.440 --> 0:18:24.800 UM it rose to that level of prominence overall student 0:18:24.920 --> 0:18:29.240 that not necessarily the parent portion, but it became, you know, 0:18:29.400 --> 0:18:32.840 campaign issues, So a lot of different politicians were running 0:18:32.880 --> 0:18:38.520 on UM forgiving everything. Biden's kind of been opposed to that. 0:18:38.680 --> 0:18:42.560 So far, he hasn't really staked his ground, but he 0:18:42.720 --> 0:18:47.080 said he was willing to do a smaller portion of forgiveness. 0:18:47.880 --> 0:18:50.359 But for parents in particular. You have a lot of 0:18:50.400 --> 0:18:53.639 people now at the age when they should be saving 0:18:53.640 --> 0:18:56.159 for retirement, at the age when they are retired, and 0:18:56.200 --> 0:18:59.600 there's still paying student lens. So you have some people 0:18:59.640 --> 0:19:04.359 collect in Social Security retirement income and paying student loans, 0:19:04.440 --> 0:19:08.919 which UM is not a good scenario, and it's not 0:19:09.000 --> 0:19:11.760 a it's not a straight Democrat Republican split, is it. 0:19:12.320 --> 0:19:15.920 People feel differently on different sides of the are now 0:19:16.480 --> 0:19:19.159 you know, everything is political these days in Washington. But 0:19:19.840 --> 0:19:23.720 under Trump, the fellow appointed to be in charge of 0:19:23.840 --> 0:19:27.160 student loans, he resigned and he said the whole system 0:19:27.240 --> 0:19:33.879 can't be fixed, and he recommended a universal, um, a 0:19:34.040 --> 0:19:37.520 universal for parents. Um, you know, have the government pay 0:19:37.520 --> 0:19:40.919 off all these debts. He simply said, the system is 0:19:41.000 --> 0:19:44.800 broken and there's no good solution to fix it, and 0:19:44.840 --> 0:19:48.160 the country as a whole is better off just starting 0:19:48.200 --> 0:19:50.720 from scratch. And it was interesting because I think that 0:19:50.760 --> 0:19:54.960 guy he actually and he blamed the schools for the 0:19:55.320 --> 0:20:00.359 universities for putting students in this in this problem. There's 0:20:00.400 --> 0:20:06.240 a massive misalignment and incentives, so parents and students can 0:20:06.240 --> 0:20:10.040 take out this money very easily. There's no background check 0:20:10.080 --> 0:20:13.400 of any type. Um, it's much more difficult to get 0:20:13.400 --> 0:20:16.879 a five thousand dollar small business loan than say a 0:20:16.920 --> 0:20:20.959 fifty dollar loan to go to college. At the same time, 0:20:21.119 --> 0:20:23.840 schools have no incentive, they have no skin in the game, 0:20:24.440 --> 0:20:27.680 so they have no incentive to keep costs down, and 0:20:27.840 --> 0:20:30.879 you know, they're happy to have more and more kids 0:20:30.920 --> 0:20:34.720 paying a lot of fees. The government, you know, gives 0:20:34.720 --> 0:20:38.760 this money out pretty easily, probably a lot easier than 0:20:38.800 --> 0:20:43.520 they should, Um, there's no type of distinction on the 0:20:43.560 --> 0:20:47.040 type of college you're going to, the type of major 0:20:47.160 --> 0:20:50.879 you're studying. Everyone's paying the same rate, and they do 0:20:51.000 --> 0:20:54.399 that for you know, particular reasons. But at the same time, 0:20:55.000 --> 0:20:57.840 if there was a different incentive, and you know, if 0:20:57.880 --> 0:20:59.840 you're going to a very good school, your grades are 0:21:00.000 --> 0:21:03.720 it and you're studying, say a field that's in high demand, 0:21:04.400 --> 0:21:06.800 you know, and on the in the private market, you 0:21:06.800 --> 0:21:10.639 would probably pay less and interest Um, you know, with 0:21:10.680 --> 0:21:13.320 the government running things, everyone is paying the same and 0:21:13.359 --> 0:21:18.400 it's creating a misalignment of incentives. And I guess one, 0:21:18.480 --> 0:21:20.280 I mean, one reason why it's probably easy to get 0:21:20.359 --> 0:21:22.439 is it's much much harder to write off. I mean, 0:21:22.480 --> 0:21:25.840 if you that the normal bankruptcy rules don't let you 0:21:25.920 --> 0:21:27.480 write it off the way you would be able to 0:21:27.480 --> 0:21:30.400 write off other kinds of consumer debt or indeed, mortgage 0:21:30.400 --> 0:21:32.400 debt that you could just walk away from. In the US, 0:21:32.440 --> 0:21:36.360 it's extremely difficult to get it written off. Lately, there 0:21:36.359 --> 0:21:40.560 have been some, you know, very few cases where people 0:21:40.640 --> 0:21:44.679 have been able to get the debt reduced, but for 0:21:44.720 --> 0:21:47.560 the most part, you know, you're stuck with it, and 0:21:48.280 --> 0:21:50.800 you know, people are stuck with it so last year 0:21:51.040 --> 0:21:53.760 that the Partmit of Education was able to claw back 0:21:53.960 --> 0:21:59.000 five billion dollars from people's social security incomes or tax 0:21:59.080 --> 0:22:03.920 refunds or other parts of um, you know, government income 0:22:04.920 --> 0:22:07.919 when someone wasn't paying their student learned that that's an 0:22:07.920 --> 0:22:11.199 incredible figure. I mean, I guess that the human, the 0:22:11.320 --> 0:22:13.800 human aspect of this is and I remember learning this 0:22:13.920 --> 0:22:17.159 many years ago, that some of the different repayment rates 0:22:17.840 --> 0:22:20.520 relate to how people feel about the debt and if 0:22:20.560 --> 0:22:24.200 you people will try very hard to hold onto their 0:22:24.200 --> 0:22:26.760 homes and to carry on paying their mortgages. If you 0:22:26.880 --> 0:22:28.800 took it, if you did a degree and actually it 0:22:28.800 --> 0:22:30.480 didn't help you much and you didn't get a great 0:22:30.520 --> 0:22:32.360 job out of it, you don't have the same kind 0:22:32.359 --> 0:22:36.520 of association. You don't feel the same kind of determination 0:22:36.760 --> 0:22:39.280 of pride in in paying it back if it hasn't 0:22:39.280 --> 0:22:41.600 worked out so well. So it's I think there's an 0:22:41.600 --> 0:22:44.840 element of of psychology around this. But in the UK 0:22:45.000 --> 0:22:48.800 you can write it's written off after thirty years student debt. 0:22:48.920 --> 0:22:51.399 I wonder whether do you think that might make sense 0:22:51.400 --> 0:22:54.000 in the US too. I think it would definitely makes sense, 0:22:54.160 --> 0:22:58.240 especially for older people or people that become disabled. One 0:22:58.400 --> 0:23:02.000 issue is people's incomes and their lives are not always 0:23:02.040 --> 0:23:05.760 a straight line. People get divorced, people have health problems, 0:23:05.840 --> 0:23:09.840 people have a death in the family, so their incomes fluctuate. 0:23:09.960 --> 0:23:13.560 They lose their jobs, so it's difficult to always pay 0:23:13.600 --> 0:23:17.359 the same amount every month with student debt, and for 0:23:17.440 --> 0:23:20.959 some people they are more than two hundred thousand dollars, 0:23:20.960 --> 0:23:23.879 so it can be quite a significant amount every month 0:23:23.960 --> 0:23:27.399 that has to go out. There's also the St. Louis 0:23:27.480 --> 0:23:32.920 FED has done some studies on the outcomes for college graduates, 0:23:33.040 --> 0:23:36.440 and for many that don't necessarily go to the best 0:23:36.480 --> 0:23:40.239 school and don't necessarily have the best grades, there's not 0:23:40.359 --> 0:23:43.200 much benefit to go to college. It's not much better 0:23:43.240 --> 0:23:48.040 than a high school degree. So there is um. There is, 0:23:48.119 --> 0:23:51.159 Like you're saying, there's a lot of problems with people 0:23:51.240 --> 0:23:55.040 feeling good about getting this that if they can't find 0:23:55.080 --> 0:23:57.639 a job that helps them pay for it, there's a 0:23:57.640 --> 0:24:01.320 massive investment. Is not very high. Turn well, Alex Tansy, 0:24:01.359 --> 0:24:03.760 thank you so much for talking us through it. Thank you, 0:24:03.840 --> 0:24:14.919 thank you very much. In case you hadn't noticed, inflation 0:24:15.200 --> 0:24:18.000 is back. The headline rate of inflation in the US 0:24:18.200 --> 0:24:20.960 hit five percent last month. That's the highest since two 0:24:21.000 --> 0:24:24.240 thousand and eight. We've talked before on this podcast about 0:24:24.320 --> 0:24:27.880 rising commodity prices and the record cost of shipping. Now 0:24:27.920 --> 0:24:32.399 it's diapers on nappiece and restaurant meals. Diaper banks have 0:24:32.440 --> 0:24:35.040 seen a jump in demand in many US states as 0:24:35.119 --> 0:24:38.280 low income families deal with the consequences of price hikes 0:24:38.280 --> 0:24:41.159 by the two companies which dominate the U S diaper market, 0:24:41.240 --> 0:24:44.639 PNG and Kimberly Clark. And now you can finally go 0:24:44.720 --> 0:24:47.600 to your local restaurant, you're probably finding that prices have 0:24:47.680 --> 0:24:51.000 gone up there as well. US Economy reporter Olivia Rockman 0:24:51.200 --> 0:24:54.080 has more on that last story. Olivia, tell me why 0:24:54.160 --> 0:24:57.880 restaurant chains are feeling the strain and needing to hike prices. 0:24:58.320 --> 0:25:01.520 And one side, they're getting a lot of pressure from commodities, 0:25:01.560 --> 0:25:05.199 so that could be chicken, beef, even shipping costs for 0:25:05.280 --> 0:25:09.080 their products. Chicken, for example, is at a decades high 0:25:09.119 --> 0:25:12.280 in terms of price increases. And on the other hand, 0:25:12.320 --> 0:25:15.000 they're being hit with with wage increases that they're having 0:25:15.000 --> 0:25:18.159 to take in order to attract workers. Because in the 0:25:18.240 --> 0:25:21.840 US we've had a lot of generous unemployment benefits, which 0:25:21.920 --> 0:25:24.480 is not motivating many people to return to the workforce, 0:25:25.040 --> 0:25:27.400 and so it's really on every end of their cost 0:25:27.480 --> 0:25:30.159 cycle that they're facing these pressures and then in turn 0:25:30.400 --> 0:25:33.520